This NYC Startup Raised $2M and What They Do Explains Everything

Imagine how much easier it is to teach – or collaborate – with an interactive screen casting whiteboard that allows you to record audio and video, annotate with drawings and shapes, and animate objects, all at the same time. Projects can be played back and edited within the app or exported as videos, images, PDF documents, or shared editable projects.

Explain Everything™ has been a game-changer for teachers, students, and professionals, allowing them to dynamically interact using rich media that adds a new dimension to the interactions.

Which explains why there have been two million downloads of the app, which has been a top paid education app in markets such as US, UK, Australia, Finland, and Canada, and which explains how the company has managed to self-fund itself for the last five year.

In fact, Explain Everything™ is installed on around 10% of all tablet devices used in K-12 schools in the U.S. and has been used as an exemplar in educational marketing and outreach initiatives by both Apple and Google.

Now they’ve just raised their Series A round to take it to the next level. The three founders – Bartosz Gonczarek, CEO; Piotr Śliwiński, CTO; and Reshan Richards, Chief Learning Officer – explain everything:

Who were your investors and how much did you raise?

Bartosz Gonczarek, CEO: We raised $2M in a Series A round led by Credo Ventures, a Prague-based venture capital firm. Other investors come from the US and Poland (New Europe Ventures, RTA Ventures, and a few others). We were our own “angel investors”at the beginning, and we remained a self-funded operation, with steady revenue growth for nearly five years. This funding enables to accelerate our progress.

Tell us about your product.

Piotr Śliwiński: Explain Everything is a content creation app used for creating stellar multimedia presentations and screencasts. At its base, the app is an interactive whiteboard with recording, integrating many cloud services (Dropbox, Google Drive, Evernote and others) for importing and exporting content. To quote one of our users, “This formidable tool is like a superhero version of PowerPoint.”

What inspired you to start the company?

BG: I remember feeling that my friends and I could fully realize our potential if we do something we really believed in — something that excited and inspired us, instead of “working for someone while implementing somebody’s ideas.”We started by creating an animation tool for making funny cartoons – similar to a puppet show with recording.The original app — PhotoPuppet — was invented by Piotr. We immediately knew that it was an idea worth pursuing. After a few months, we joined forces with Reshan Richards, who found our app.

PS: The underlying principals of PhotoPuppet aligned perfectly with his doctoral research on the use of screencasting in education. The resulting app, Explain Everything, became an instant success. After more than three years, we decided that we should direct our focus primarily on this app and augment it with new services. Explain Everything, Inc. will follow this direction.

How is it different?

Reshan Richards, CLO: We feel that the simplicity of our app hides its depth, which is generally uncovered as people begin to use it for more and more different purposes. Many tools have either simplicity without depth or depth without simplicity. We really made an app that we wanted to use ourselves. Timing was also important for us. When we first launched, it was the early days of the iPad, and there were not many content creation apps.

PS: Our app continues to enable users to insert PDF documents and annotate on them, while recording their voice. It’s possible to insert videos and draw on them. It’s possible to spin things around (even videos). Everything happeninggets recorded and you can play it back and rewind it using a timeline. There’s nothing else like this in the App Store right now.We have also have version for Android and Windows 8.1. We are proud that there are not a lot of tools like ours that run on all three major mobile operating systems.

Who are your biggest adopters, so far?

RR: The app is used primarily by teachers and students inK-12 education especially in the USA, Australia, UK, and Canada. For example, the largest US school district, LAUSD (Los Angeles Unified School District) has about 80,000 users. We have more than 1.2 million users in the USA and over 2 million around the world.Teachers are preparing lessons and activities using Explain Everything and students are creating innovative content —explaining their thinking usingour app.

BG: Currently,our model is based on a one-time sale at a fixed price ($2.99 or $1.49 USD for a volume purchase). We’re working on a portal that will be asharing and showcase destination for our users. It will also come with a model more suitable for large school districts and enterprises beyond K-12.

What was the funding process like?

BG: We first started communicating with investors two years ago. It was slow at the beginning, but it became faster,once we found a good advisor. We provided our slide deckand our advisor lined up several venture firms, based on their initial responses to our story. After narrowing down the list, we had a strong sense of who might be a good business partner for us.

PS: We knew the importance of finding a long-term partner, so we set our expectations to includeadded value related to their capabilities and networks. Signing the term sheet took no more than four weeks. However, to close the funding we needed to restructure our existing entities and agreements, which together took about four months. Therefore, the whole process was about six months long. This process has allowed us to expand our team, open a new office in New York,and set up our organizational structure for the future.

What are the biggest challenges that you faced while raising capital?

BG: Building trust. We needed to convince the prospective investors that our thinking and plans around our thinking were sound.Initially, we were not really prepared for this. We took some of our achievements(and deficiencies) for granted and omitted some pieces of information that normally should be explicitly outlined. On the other hand, our company had a significant amount of traction and steadily rising revenue as we entered the process.

The second challenge was to set our expectations correctly. However, we were reasonable with our assumptions and believed that we were bound to find equally reasonable partners. And we did. The match here is crucial as otherwise it is possible to create a ticking “time bomb” that, with each month, widens the gap between performance and investors’ expectations. Don’t allow that – optimism about the future can be managed only by creating a realistic plan that encapsulates possible upsides and spikes.

What factors about your business led your investors to write the check?

RR: We believe that it is both track record and traction.Ourcompany was supported by self-generated revenue and a larger user-base — both which were growing and continue to grow steadily. At this time, we have more than two million users who have downloaded a paid app! There’s a lotmarket potential and opportunities that we previously did not have the resources to dive into. Now we can extend our ideas even further.

What are the milestones you plan to achieve in the next six months?

BG: We want to excel at what we do now and implement a number of requests from our users. Without being too specific about what we’re going to unveil soon, we can say that we are amazed by and are highly responsive to our users’ responses and guidance. When we were starting, we were kind of in the dark when matching possible app uses with users’ intentions. Now, we have a very clear idea of what is expected. We’ll not only work to achieve that, but we intend to go further and surprise our users with future innovations.

What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?

BG: In the software business, a lack of capital is not a major constraint. If you’re passionate enough, you are able to ignite interest in your idea and assemble a team working for the promise of the future. If you’re serious about what you want to do, you can bootstrap as we did, but start with product, not funds.

Where do you see the company going now over the near term?

PS: In the near term, we’ll increase our user base to over 2.5 million users and also release some new, exciting updates to our app. The showcase portal mentioned earlier will follow soon thereafter.

What’s your favorite NY area beach?

BG: Not exactly a beach, but Central Park before sun rises. When I work from NY, I rarely adjust to the local time zone, so my working hours are skewed toward Central Europe Time. This gives me an advantage to be literally the first runner in the central park. If you notice someone hitting 10 mph on the loop before 5AM – that’s probably me 🙂